Category Archives: Libertarian Thought

The Task of Persuasion

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Bob Higgs writes,

once the libertarian has persuaded someone that government interference is wrong, at least in a certain realm, if not across the board, there is a much smaller probability of that convert’s backsliding into his former support for government’s coercive measures against innocent people. Libertarianism grounded on the moral rock will prove much stronger and longer-lasting than libertarianism grounded on the shifting sands of consequentialist arguments, which of necessity are only as compelling as today’s arguments and evidence make them. Hence, if we desire to enlarge the libertarian ranks, we are well advised to make moral arguments at least a part of our efforts. It will not hurt, of course, to show people that freedom really does work better than state control. But to confine our efforts to wonkism dooms them to transitory success, at best.

Pointer from Don Boudreaux. Let me re-state this in terms of the three-axis model. Using consequentialist arguments is an attempt to meet someone on their own axis. The “moral rock” that “will prove much stronger and longer-lasting” is to get someone to shift axes.

Claiming that government anti-poverty programs do not work is a consequentialist argument that is intended to meet the progressive along the oppressor-oppressed axis. Claiming that drug laws tend to increase violence is a consequentialist argument intended to meet the conservative along the civilization-barbarism axis. The advantage of these sorts of arguments is that they are easily comprehended by those you are trying to persuade. The disadvantage, as Higgs points out, is that this form of argument involves painful struggles, issue-by-issue and fact-by-fact. Arriving at the inevitable military analogy, Higgs writes

the anti-freedom forces with which libertarians must contend possess hundreds of times more troops and thousands of times more money for purchasing munitions.

Instead, suppose you try to convince people of the similarity between government and organized crime. You say that both provide “protection” backed by coercion. The advantage of this is that if you can get someone to shift to looking at issues along the freedom-coercion axis, that person will be less receptive across the board to arguments for state intervention based on the oppressor-oppressed axis or the civilization-barbarian axis. The disadvantage with this strategy is that your position is likely to be incomprehensible to most of those you are trying to persuade. To most people, drawing an analogy between government and organized crime seems crazy. It makes you sound like a very bitter, alienated person who resents the obligation to participate in society.

My guess–and perhaps Higgs would agree–is that the best strategy is to meet people along their preferred axis and to use consequentialist arguments until they begin to have doubts about the utility of government in dealing with oppression or barbarism. At that point, they may be ready to consider the freedom-coercion axis. However, if you go straight to the freedom-coercion axis and skip the step of meeting progressives with consequentialist arguments along the oppressor-oppressed axis or meeting conservatives with consequentialist arguments along the civilization-barbarian axis, then you risk getting nowhere.

Searchers vs. Planners

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Dana Goldstein reports,

In 2008, four Harvard and MIT graduate students studying developing-world economics decided to form their own giving circle. The research literature on anti-poverty aid was discouraging. In India, an estimated 50 to 60 cents of every government dollar spent on food or employment aid for the poor is lost due to corruption, and private philanthropy, too, is heavily skimmed as it makes its way into the hands of the poor…

So where did that leave four private donors, anxious to fight global poverty, but too savvy to trust many of the leading models for international aid? Paul Niehaus, Michael Faye, Rohit Wanchoo, and Jeremy Shapiro came up with a radically simple plan shaped by their own academic research. They would give poor families in rural Kenya $1,000 over the course of 10 months, and let them do whatever they wanted with the money.

Read the whole story. Pointer from Tyler Cowen. My title for this post refers to William Easterly’s view that bottom-up aid solutions are better than top-down.

Thoughts on Newtown and Political Authority

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Some thoughts on the school shooting.

1. I think that the three axes serve to predict reactions fairly well. Libertarians, concerned with freedom vs. coercion, are skeptical of adding to government power in an attempt to prevent school shootings. Conservatives, concerned with civilization vs. barbarianism, stress the derangement of the shooter. Progressives, looking for an oppressor, have identified the gun lobby. UPDATE: Russell Nieli, who I would categorize as conservative, blames absentee fathers.

2. If it is possible to build a car that is smart enough to drive itself, should it not be possible to build a gun that is smart enough to know when not to shoot? (a camera knows where the gun is pointing… software analyzes the image to determine whether it is a morally acceptable target… seems like the only kind of gun I would want in my house)

3. I think that the reaction to Newtown may tell us something about the psychological forces that incline people toward what Michael Huemer calls political authority. Huemer asks why we tolerate coercion from agents of government that we would not tolerate from private individuals. My hypothesis, based on Newtown, is that people are much more upset by danger that appears sporadically, anonymously, and unpredictably than by danger that is constant, identifiable, and predictable. So I think that one reason people accept government coercion is that it is relatively constant, the government’s leaders are identifiable, and their actions are fairly predictable.

(I have taken one pass through Huemer’s new book. I found it very stimulating, and I thought it was worth the high Kindle price. In the future, I will give a much longer analysis, not entirely favorable, of Huemer’s line of thought.)

What is a Charitable Contribution?

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Robert Shiller writes,

We trust one another, and not just the government, to make important decisions and to take action. Self-reliant does not mean selfish: while it is important that we manage our personal finances responsibly, we also have a deep tradition of giving to others. Many of us believe that we have obligations to others that only we can interpret, through our own consciences.

Pointer from Mark Thoma.

My question concerns how we define a charitable contribution. For example, only non-profits qualify to receive charitable contributions. I see no reason for this to be the case. I do not think that non-profit is inherently more ethical than for-profit.

Another way to define a charitable contribution would be as money donated for which you receive nothing in return. But donors get psychic benefits in return for contributions. So you could say that you are being charitable if you get nothing tangible in return. Does that mean that if I take a yoga class or go to a psychotherapist that I am making a charitable contribution?

I think that it is possible to come up with a definition of charitable contribution that works. It has something to do with the intent to provide tangible benefits to others. My contribution to a school for at-risk kids differs from my taking a yoga class in that regard.

Consider four things you can do with your income: spend it on personal consumption; invest it for the future; donate it in order to provide benefits to others; or pay it in taxes.

If we had a pure consumption tax with no charitable deduction, then the privileged activities would be investing for the future and donating to charity in the present. In that case, I would not be too inclined to give people an incentive to donate to charity in the present.

I am still trying to think through this issue.

Ideology and Views of Human Nature

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Dan Kahan writes,

Measures of ideology of the sort that I have used here have not – as far as I know; please do tell me if I’m wrong: the pleasure of learning something new will more than compensate me for the embarrassment of being shown to be ignorant — been validated as predictors of “different conceptions of human nature.” Indeed, I think the idea that ordinary members of the public have “conceptions of human nature” is extravagant—the sort of thing only someone who has never ventured outside a university campus would likely believe.

If members of the public do not have conceptions of human nature, then what makes you think they have ideology? Of course, they can answer survey questions on issues, and their answers can be highly correlated with one another in a way that looks like ideology. That is what I believe is shown by the empirical analysis Kahan provides in his post.

By the same token, my guess is that by asking the right sorts of survey questions one could uncover empirical measures of the conceptions of human nature just as interesting as the empirical measures of ideology. In fact, George Lakoff may already have done this. He talks about conservatives believing in “strict father morality” that is based on a much darker view of human nature than the “nurturant parent” morality of liberals. However, I do not remember whether any of Lakoff’s analysis is empirical rather than merely conjectural.

Suppose that we set aside the issue of whether ordinary people think like academics. Take the set of people who you believe have an ideology and have a conception of human nature. Are ideology and conceptions of human nature related? I believe so.

I think that conservatives tend to hold the most pessimistic view of human nature. That is, they think that everyone is prone to barbarism in the absence of the constraints provided by the civilizing forces of family, religion, civil society, and government.

I think that progressives hold a more optimistic view of human nature. Most people are good, but some people are bad. The bad people are oppressors, and the challenge of political life is for the good people to overcome the bad people.

I think that libertarians hold the most optimistic view of all. For example, embedded in Michael Huemer’s new book advocating anarcho-capitalism is a view of human nature that is “basically rational.” In particular, if left to themselves, most people are able to calculate that initiating violence is a bad idea. My concern is that too much of his argument depends on this concept of human nature, and this will prove to be a stumbling block in reaching conservatives and progressives with his vision.

Reader Questions on the Three Axes

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Taken from the comments on this post.

Are Stalinists and Nazis nothing but progressives and conservatives who are willing to use extreme coercion to get rid of oppressors or barbarism, respectively?

My initial inclination is to leave Stalin and Hitler out of the three-axis model. It might be best to limit that model to the Anglo-American political tradition.

Your leanings are libertarian *now*. When they weren’t, how did you view the world then?

When I was in high school and on the left, I was all about the oppressor-oppressed narrative. Majoring in economics in college helped to change that. Also reading David Halberstam on Vietnam. He was a fierce opponent of the war, but he never took the view that the war was an outgrowth of capitalist oppression, which was the standard line of the New Left in those days. I would now say that I lost my faith in the oppressor-oppressed axis, although I do not think I could have articulated my views that way at the time.

Today, I would say that my three-axis model has made me somewhat skeptical of everyone–progressives, conservatives, and libertarians. Or, more positively, I think that at least sometimes the progressives get it right (oppression is the right issue on which to focus in some cases) and conservatives get it right (barbarism is a legitimate worry). Often, I think that the libertarian focus on the dangers of government power is the most useful framework. But I think that the worst thing is to be so stuck along one axis that you do not even realize that you are stuck there.

Adverse Consequences of the Internet

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Jaron Lanier warns of them, in a story by Ron Rosenbaum.

he [Lanier] singled out one standout aspect of the new web culture—the acceptance, the welcoming of anonymous commenters on websites—as a danger to political discourse and the polity itself. At the time, this objection seemed a bit extreme. But he saw anonymity as a poison seed. The way it didn’t hide, but, in fact, brandished the ugliness of human nature beneath the anonymous screen-name masks. An enabling and foreshadowing of mob rule, not a growth of democracy, but an accretion of tribalism.

Read the whole article. Some thoughts.

1. Lanier’s view that Google and other companies that aggregate user information (in his example, to train Google’translation algorithm) are taking unfair advantage of those users was not at all persuasive to me.

2. His concern about the down side of anonymity is one that I share.

3. Suppose we use the three-axis model to examine anonymity. For a conservative, the concern would be that anonymity would encourage man’s barbarous nature. Thus, Lanier’s argument should resonate well with conservatives. For a libertarian, anonymity represents a way to evade government control. Hence, along the freedom-coercion axis it is a plus. For a progressive, anonymity is good if it is used by the weak and bad if it is used by the strong. Note that in the story Lanier emphasizes different axes on different issues (that is by no means a bad thing).

4. Facebook cuts against the grain of anonymity on the Internet. I think that this is one of the most interesting and important aspects of Facebook, and I have not come across any commentary about it.

Exaggeration in Political Stereotypes

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Jonathan Haidt’s latest.

The ideological “culture war” in the U.S. is, in part, an honest disagreement about ends (moral values that each side wants to advance), as well as an honest disagreement about means (laws and policies) to advance those ends. But our findings suggest that there is an additional process at work: partisans on each side exaggerate the degree to which the other side pursues moral ends that are different from their own. Much of this exaggeration comes from each side underestimating the degree to which the other side shares its own values. But some of it comes, unexpectedly, from overestimating the degree to which “typical” members of one’s own side endorse its values.

Pointer from Kevin Drum, via Tyler Cowen.

This is consistent with what I think happens in my “three axes” model. That is, I would expect progressives to view themselves as particularly sympathetic to the oppressed and to view others as on the side of oppressors. I would expect conservatives to view themselves as particularly sympathetic to the civilized and to view others as on the side of barbarism. I would expect libertarians to view themselves as particular sympathetic to freedom and to view others as on the side of coercion.

Let me emphasize that I am not using “three axes” to try to explain what different people believe. It is not a theory of why people believe what they believe. Rather, it is a way of organizing their beliefs. It is a way of predicting how different partisans will communicate their beliefs, how they will interpret issues, and how they will interpret the views of those who disagree.

Haidt is a major influence on my thinking. However, there are limits as to far I want to go in the direction of relating ideological beliefs to personal psychology. As Jeffrey Friedman has taught me, trying to explain why person X believes something is often an effort to avoid treating X’s beliefs with respect. It is really hard, perhaps even impossible, to psychologize about someone else’s political beliefs in a way that is not demeaning.

The goal of the three-axes model is to enable people to see how others might arrive at a different viewpoint on a particular issue. My own leanings are libertarian. However, I would hope that anyone, whether progressive, conservative, or libertarian, could use the three-axes model to better appreciate that others’ views have some justification.

John Cochrane on Health Care

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A reader asked me to comment on Cochrane’s essay from October 18. The title of the essay was “After the ACA,” which might indicate that Cochrane mis-forecast the election. To make a long story short, I agree with his economic prescription but disagree with his political diagnosis for why we have what I call insulation instead of real health insurance. Cochrane’s explanation for the absence of the latter is:

Because law and regulation prevent it from emerging. Before ACA, the elephant in the room was the tax deduction and regulatory pressure for employer‐based group plans. This distortion killed the long‐term individual market and thus directly caused the pre‐existing conditions mess. Anyone who might get a job in the future will not buy long‐term insurance. Mandated coverage, tax deductibility of regular expenses if cloaked as “insurance,” prohibition of full rating, barriers to insurance across state lines – why buy long term insurance if you might move? – and a string of other regulations did the rest. Now, the ACA is the whale in the room: The kind of private health insurance I described is simply and explicitly illegal.

My thoughts:

1. Nowhere do we observe the Cochrane (or Kling) health insurance system, or anything close to it. This suggests that something other than anomalous U.S. regulations are at work.

2. Health care is something that people love to have others pay for. Insert obligatory Robin Hanson reference.

3. Very few people understand insurance in general. Most people seem to be more loss averse than risk averse. They will buy extended warranties on cheap goods but ignore risks of catastrophic events, such as floods.

4. All around the developed world, third-party payment dominates direct consumer payment for health care. Perhaps consumers feel that if they are spared the need to take out their credit cards then it is easier sustain the belief (illusion?) that their doctors really care about them.

5. All else equal, doctors prefer being paid by someone other than the patient. They prefer to be thought of as offering the “gift of healing.” Of course they do want to get paid.

It turns out, much to doctors’ dismay, that all else is not equal. Third party payers impose all sorts of unpleasant paperwork and regulation. But you won’t see many doctors lobby for consumer-paid health care as the solution. They seem to view paperwork and regulation as an evil plot foisted on them for no apparent reason, without recognizing that it as an intrinsic result of introducing a third party into the payment process.

Cochrane goes on to discuss health care supply. Again, I agree with his prescription, which is to allow for vigorous competition. But he seems to regard health care regulation as an evil plot foisted on society, without recognizing that it may emerge naturally.

Competition is a trial-and-error process. In health care, we equate consumer protection with prevention of error, creating a trade-off between consumer protection and competition. Our choice along this trade-off is affected by the problem of “the seen and the unseen.” Health care errors have concentrated, direct impact on identifiable patients. Competition has diffuse benefits that show up indirectly in an ill-defined broader population. I think it is very difficult to convince people to trade off consumer protection for competition. And, of course, incumbents in the health care industry will do their best to persuade people not to make that trade-off.

While I think Cochrane’s essay will appeal to those who are already inclined to agree with him, others are unlikely to be persuaded. Incidentally, I had the same reaction to John Goodman’s book, Priceless.

Neither Cochrane nor Goodman addresses the arguments for intervention that derive from Arrow and Stiglitz. Arrow focuses on asymmetric information between consumers and doctors, which appears to justify consumer protection. Stiglitz focuses on asymmetric information between consumers and insurance companies, which appears to justify mandated health insurance.

Both the Arrow argument and the Stiglitz argument have merit in theory. My own view is that other forms of “market failure” are more important in practice. The “seen and the unseen” problem that I alluded to earlier means that, contra Arrow, we have too much consumer protection in medicine, not too little.

As I suggested earlier, the health insurance market suffers from the fact that consumers choose on the basis of loss aversion rather than risk aversion. Moreover, contra Stiglitz, there is that evidence relatively healthy people, rather than opting out of health insurance, are more likely to pay for it. This reflects the fact that the personality characteristic of conscientiousness drives both health and the propensity to obtain insurance. As a result, health insurance companies are treated to favorable selection, not adverse selection.

Having said that, I do not think it is Arrow and Stiglitz that libertarians need to overcome. I think we need to understand the deep-seated cultural beliefs that pertain to health care and either adapt our recommendations to those beliefs or try to change them.

Mortgage Brokers and the Three Axes

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Susan E. Woodward and Robert E. Hall write,

Untrained, inexperienced borrowers interact with specialist mortgage brokers in the mortgage origination market. Brokers earn two kinds of compensation, explicit charges the borrower pays in cash and a commission the lender pays based on the spread between the coupon rate the borrower agrees to and the par mortgage interest rate. Both types of broker compensation seem to confuse borrowers. The wholesale lender’s commission is determined by financial dynamics understood by a tiny group of professionals, and the rate sheet that summarizes the possible payments is never shown to borrowers.

…With respect to policy changes that might help achieve a more efficient equilibrium, we believe in evidence-based design. Disclosure law has historically been in the hands of lawyers, who designed dense forms that may help absolve their clients of blame for consumer error, but which did little to help consumers find better deals. A new movement to design disclosures that are proven to be helpful, through field experiments, may result in some progress. Whether these forms can overwhelm the persuasion of skilled expert salesmen remains to be seen. We are inclined to believe that simple admonitions, such as “mortgage brokers are salesmen and the only way to get a good deal is to shop and bargain” and “you are more likely to get a good deal if you shop for no-cost loans” are more likely to yield improvements than, for example, trying to teach borrowers enough financial economics to understand the tradeoff between cash and the interest rate.

(Note that the quote is from the published version, which is subscriber-only. The link goes to an earlier version.)

This can be viewed through the oppressor-oppressed narrative. Mortgage brokers can earn more money by luring borrowers into more expensive mortgages (usually, “more expensive” means a present-value cost to the borrower of $1000 or so, but it can be higher than that). Note, however, that as Woodward and Hall point out, this does not make mortgage brokers rich. The brokers operate in a highly competitive environment, and while they over-charge as many borrowers as they can, profits are competed away in marketing expenses used to try to lure those borrowers.

This also can be viewed through the civilization-barbarism narrative. This sort of business does not exactly attract and reward caring, conscientious sorts of people. I think of mortgage brokers as slick and deceptive salesmen, prone to sports cars, bling, and other signs of conspicuous consumption.

Of course, from the standpoint of the freedom-coercion narrative, nobody forces you to take a loan from a mortgage broker, and it is a highly competitive industry. However, I think you have to be at least in the 99th percentile for sophistication in legal and financial calculations in order to be able, as a consumer, to use the competition to your advantage and to get the best possible deal.

I am pessimistic that consumer education or rules-based regulation can prevent consumers from being exploited in these situations. I think that the best chance is with principles-based regulation. That is, rather than designing the disclosure form, introduce the principle that disclosure should enable the consumer to understand and compare fees from different lenders.